TRALAC - Trade Law Centre

South Africa: Investor Glitch Dents Confidence in IDZ Investment

Monday, 11 July 2005

Source: Business Day (Johannesburg)

South African empowerment company ICAN has not applied for the funding of a stake it said it would take in a Coega textiles project, despite saying in May that it was weeks away from securing it.

Coega IDZThe setback casts a shadow over Coega's first investor.

The development zone, established to draw foreign investment, has for years been struggling to tie down investors.

At a media conference on May 18 to announce the project to make fire retardant industrial textiles, ICAN CE Paul Jones said Industrial Development Corporation (IDC) funding for his company's 51% stake in the venture would come within "weeks".

Last week, however, an IDC spokeswoman said the corporation had no record of an application for the R180m that it would have cost ICAN to buy the stake.

Belgian textile maker Sander International, which is due to hold the remaining 49%, said it was surprised to hear that ICAN had not applied for funding.

Ernest Hewitt, CEO of Sander SA, said that ICAN had told him it was unable to raise the R180m funding -- worth most of the R200m project.

Hewitt said ICAN was not critical to the project, which was already under construction. Sander was already talking to several other potential empowerment partners, he said.

Sander SA would produce niche fabrics for the hospitality and shipping industries.

Sander International has signed a 20-year lease with Coega.

On Friday Jones declined to say why ICAN, led by motivational speaker and evangelist David Molapo, had withdrawn from the project. Molapo, Jones and Molapo's wife, Mamikie, are shareholders in ICAN.

A source outside of ICAN said the company was concerned about a lack of experience in the South African management of the venture.

The company's website says it is involved in branding, information technology and training.